For those of you that don’t know, and for those that do know but haven’t yet revised your employee compensation packages, this is a reminder that the requirements for meeting exemptions under the Fair Labor Standards Act (“FLSA”) are changing. The changes are going into effect on December 1, 2016.
What does this mean? Essentially, the FLSA requires that every employee be paid at least minimum wage at an hourly rate, with time and a half for any hours worked over 40 hours in a given week, unless that employee qualifies for an exemption. The Department of Labor recently raised the salary thresholds applicable to many exemptions. This means that although you may currently be paying an exempt employee properly, you may need to adjust their salary, or re-classify the employee as non-exempt by December 1, 2016. Below is a brief breakdown of these very significant changes:
- The salary level for many exemptions has increased from $455 per week ($23,660 annually) to $913 per week ($47,476 annually); and
- The total annual compensation that is necessary for an employee to qualify under the “highly compensation” exemption is being increased from $100,000 per year to $134,004 per year; and
Thus, if you are currently paying an employee less than $47,476 a year and that employee has been classified as exempt, you must either re-classify that employee as non-exempt and pay them for all hours worked and time and a half for all overtime hours worked, or you need to raise the employee’s salary to at least $47,476 per year. You will need to take similar corrective action for any employee that is currently being treated as exempt under the “highly compensated” exemption.
If you haven’t yet made these changes, or if you are unsure whether these changes are necessary for your business, please do not hesitate to contact us. Storrings Law is here to help.